This article was originally published in the March/April 1996 issue of Home Energy Magazine. Some formatting inconsistencies may be evident in older archive content.

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Home Energy Magazine Online March/April 1996

trendsin energy

Prepurchase Meter Rivals Weatherization for
Low-Income Assistance

Beginning in 1993, the Salt River Project (SRP), a public utility in Arizona, tested two new strategies to help low-income customers decrease their energy usage. The first was increased weatherization combined with in-home energy education. The second was a prepurchase plan, which improves customers' understanding of the relationship between usage and energy bills. SRP tracked the utility bills of customers who received the two types of assistance in Maricopa County (which includes the city of Phoenix) and found that both approaches significantly reduced electricity bills.

The Pay As You Go display unit is mounted inside the customer's home, usually on an exterior wall in a high traffic area. With the touch of a button, the unit allows customers to find out how much electricity they have left, how much they are currently using, their electric rate, and their recent energy usage history.

SRP-Assisted Weatherization
The City and County Weatherization Assistance Program (WAP) typically installs weatherstripping, caulk, water heater wraps, ceiling insulation, and faucet repairs with funding from the Department of Health and Human Services' Low-Income Home Energy Assistance Program (LIHEAP) and the Department of Energy's Weatherization Assistance Program. For the pilot, SRP increased the funding level for some customers to provide additional ceiling insulation, roof repairs, cooling-system repair and replacement, and refrigerator replacement.

SRP also developed three in-home energy education visits specifically designed for low-income customers. Energy specialists reviewed customers' energy usage history and discussed easy energy-saving tips to help reduce their electric bills. The first visit occurred after the weatherization measures were installed and there were two more visits over the following 12 months.

Pay As You Go Prepurchase Option
Other customers had an option to purchase electricity at an SRP business office before using it. The purchase amount is electronically encoded on a plastic card, which is read by a display unit installed inside the home. The meter allows the residents to use energy until the cash balance is depleted. Customers purchase electricity when they want to, in the amounts they can afford, in order to better control their energy usage. The device emits warning beeps when the customer's electricity supply is getting low.

The display unit in the customer's home provides the following information in dollars and cents:

How much electricity is left to use.

How much is being used right now.

How much was used yesterday.

How much was used in the last 30 days.

Last amount of electricity purchased that was run through the display.

Current electric rate.

The Structure of the Pilot
For a controlled study, SRP divided customers who came to them for assistance into three groups (all participants had to meet certain eligibility criteria). They included customers who received

A control group was also chosen, consisting of 44 households with similar income and usage patterns, who received no services. These customers had not asked SRP for any assistance.

The WAP Only group received an average of $1,800 worth of improvements per customer, and SRP added up to $1,000 more for the participants in the WAP & SRP group. The initial cost for the Pay As You Go meters and processing was about $900 per customer, with ongoing costs of about $160 per year. These costs are already declining rapidly, however, as SRP expands the program and can purchase meters in bulk.

Energy Usage
Customer accounts were studied over the period from September 1993 through December 1994. After the program, parrticipants in the WAP & SRP group used an average of 22% less electricity than members of the control group. Participants in the Pay As You Go group used an average of 20% less electricity than members of the control group, while the WAP Only group used an average of 5.5% less than the control group.

Customer Penalties
The number of occurrences of late payment fees, returned checks, field collections, and disconnect orders was averaged for each group. Participants in the WAP & SRP group experienced an average of 24% fewer penalties per month than participants in the WAP Only group. Pay As You Go participants experienced an average of 83% fewer penalty occurrences overall than participants in the WAP & SRP group; however, they incurred significantly more returned-check fees.

One of the benefits of the Pay As You Go option was that it provided participants with an automatic means to reduce the number of penalty occurrences. The prepurchase system eliminated all penalties except the returned check fee.

The WAP Only and WAP & SRP groups incurred more fees for late payments, field collections, and disconnect orders than did the control group. (While all of the customers were in the same income and energy usage ranges, the control group customers had not sought assistance from SRP in paying their bills.) There was no difference in returned check fees for the weatherization groups before and after the weatherization. The WAP & SRP group had fewer late-payment fees compared to the WAP Only group. There was no difference for returned check and disconnect order fees, but the WAP & SRP group incurred more cost for field collections fees. Although the WAP & SRP group averaged fewer penalties than the WAP Only group, the penalties they incurred were more costly.

The WAP Only group did not show any improvements in SRP credit history. The WAP & SRP participants' credit history improved, but the percentage of participants in the unsatisfactory category stayed the same. The Pay As You Go group had the highest percentage of unsatisfactory participants at the beginning of the data collection (83%), but showed the greatest improvement; ultimately half of the participants gained preferred credit status.

Program Satisfaction
Participants in both the WAP & SRP group and the Pay As You Go group liked the programs. Most WAP & SRP respondents said they were either very satisfied or satisfied with the program that provided energy improvements to their homes and the in-home energy education visits, while the majority of Pay As You Go participants were very satisfied.

SRP will expand the geographic area served by the Pay As You Go program and increase the number of locations where customers can purchase electricity. The prepurchase option appears to be at least as effective as WAP & SRP, at a somewhat lower cost per customer.